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Google's Ad Business Soars But Quarter's Revenue Hit By Third Party Payments

Google parent Alphabet on Thursday reported lower than expected revenue for the third-quarter despite strong advertising profit, and rising expenses trimmed its operating margin for the third straight quarter.

The company's third-quarter revenue rose to $33.74 billion.

Alphabet reported net profit of $9.19 billion, or $13.06 per share, compared with $6.73 billion, or $9.57 per share in the year-ago quarter.

Google has posted strong revenue growth for several years as retailers flock to buy product ads on Google's search engine and commercials on YouTube.

Third quarter ad revenue was about $29 billion, up 20.3 percent from a year ago.

The sums Google pays partners to distribute its search engine and ads -- called Traffic Acquisition Costs -- rose to $6.58 billion for the quarter. That was 23 percent of ad revenue, unchanged from 23 percent in the second quarter.

Capital expenditures totaled $5.28 billion in the quarter, up 49 percent from a year earlier. The company is spending billions of dollars a year to build data centers and servers, while developing and marketing new consumer hardware like its Pixel phones.

Sales from cloud computing services and hardware businesses combined with revenue from what Alphabet calls "other bets" in healthcare and internet infrastructure were $4.79 billion in third quarter, 43 percent above the same period last year.

Seperately, Google Chief Executive Sundar Pichai said on Thursday the company had fired 48 employees for sexual harassment over the past two years.

Pichai sent an email to Google employees in response to a New York Times story that was published earlier in the day.

The report said the search engine giant protected three senior executives from allegations of sexual misconduct by offering them payouts.

The email said of the 48 that were fired, 13 were senior managers or held more senior posts.

However, Pichai said none of those employees received an exit package.